Did you know that when you sell a stock (held outside of a tax-preferenced account), you need to account for that sale on your taxes? And did you know that you need to determine the "cost basis" of the investment sold?

The "cost basis" of a stock is the basis used to determine your capital gain or loss for tax purposes. The cost basis is the amount you paid for your stock. However, depending on what happened to the company over time, you may need to adjust the cost basis to reflect various corporate actions.

Take AT&T. When AT&T divested the seven Baby Bells at the end of 1983, shareholders of AT&T were required to adjust their cost basis of the AT&T shares to reflect the seven new companies. And when AT&T spun off Lucent Technologies and then NCR, AT&T shareholders were required to make additional adjustments to their cost basis. Furthermore, if you bought shares in AT&T multiple times, you'll have to determine your cost basis for every purchase.

The upshot is that figuring out the cost basis for stock that you sell can be a nightmare.

Fortunately, if you maintain good records, the process is doable. Also, one of the nice things about a BUYandHOLD account is that you always know your average cost of your investments. This can be extremely useful come tax time.

If you are looking for help in determining your cost basis on AT&T or any of the related companies (SBC Communications, Lucent, NCR, etc.), you might want to check out my special AT&T Tax Wizard product. This report, which is available online at www.atttaxwizard.com, provides all of the information you need to figure out your cost basis. AT&T Tax Wizard includes easy-to-use work sheets and examples to guide you every step of the way through the maze of determining your cost basis on AT&T and related Baby Bells. Even if you have someone else do your taxes, you should obtain this report and give it to your tax adviser in order to save him/her time (and you money).

The BUYandHOLD website contains links to third-party websites on the Internet. BUYandHOLD provides these links to these websites only as a convenience to users of the website. Links on the BUYandHOLD website are not endorsements by BUYandHOLD or Freedom Investments, implied or express, of the linked sites or any products, services or links in such sites; and no information in such sites has been endorsed or approved by BUYandHOLD. Linked sites are not under the control of BUYandHOLD or Freedom Investments, and we are not responsible for the contents of any linked site or any link contained in a linked site. No information contained in the BUYandHOLD website or accessed through any linked site, or any link contained in a linked site, constitutes a recommendation by BUYandHOLD or Freedom Investments to buy, sell or hold any security, financial product or instrument. Information accessed through linked sites is not, nor should be construed as, an offer or a solicitation of an offer, to buy or sell securities by BUYandHOLD or Freedom Investments. BUYandHOLD does not offer or provide any investment advice or opinion regarding the nature, potential, value, suitability or profitability of any particular security, portfolio of securities, transaction or investment strategy, and any investment decisions you make will be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance, and liquidity needs.